Key Insights
- 2024 has been a massively positive year for Bitcoin, with a YTD increase of $140%.
- Some of the key drivers of this rally were the spot Bitcoin ETF approval and pro-crypto Donald Trump’s win in the 5 November election.
- In the future, analysts expect Bitcoin to increase in price despite hurdles ultimately.
- Possible price targets range anywhere between $125,000 and even $500,000.
2024 was a fantastic year for Bitcoin, as the flagship cryptocurrency shattered expectations by breaking through $100,000 and hitting $108,000.
This multi-year surge showed the growing popularity of the world’s largest cryptocurrency, which has a market cap of over $2 trillion.
But what is fueling this rally, and could Bitcoin climb even higher?
Here are the top drivers behind this meteoric rise, according to experts, as well as what to expect from the cryptocurrency in the future.
1. Trump’s Pro-Crypto Policies
One of the biggest contributors to Bitcoin’s price surge was Donald Trump’s return to the White House.
According to data from TradingView, Bitcoin is currently up by around 130% on a YTD basis.
Interestingly, most of this growth occurred in the last few months of the year, soon after Donald Trump’s November election win.
The United States president-elect’s pro-crypto stance before the elections and his policy actions after winning have made investors much more confident so far.
Moreover, Trump’s appointment of crypto-friendly figures to key positions has also played a significant role in this.
One of these is his appointment of Paul Atkins to lead the SEC, which signals a shift towards regulatory lenience.
The SEC’s expected approach towards Crypto under Atkins is expected to contrast sharply with that of the former chief, Gary Gensler.
Additionally, Trump’s decision to name Elon Musk as head of the newly created Department of Government Efficiency (DOGE) has sparked excitement across the Crypto space.
2. Institutional Adoption on the Rise
Another factor driving this rally is the rate of Institutional adoption. So far, in 2024, major corporations have embraced Bitcoin, with many of them adding the asset to their balance sheets.
Many others have also introduced Bitcoin-focused investment products, with corporations like MicroStrategy stocking up on nearly $20 billion worth of the cryptocurrency in 2024 alone, according to Bitbo.
The approval of 11 spot Bitcoin ETFs earlier this year also marked a turning point for Bitcoin throughout the rest of 2024.
According to data from Soso Value, these funds have attracted over $32 billion in inflows so far, clearly reflecting interest from both retail and institutional investors.
3. Federal Reserve’s Policies
Another reason for this YTD surge might be Federal Reserve Chair Jerome Powell’s recent announcement of a rate cut on 18 December.
The US FED reduced interest rates by 25 basis points to a benchmark range of 4.25%-4.5%, despite Powell stating earlier that the US economy is in “remarkably good shape.”
Although this decision caused a temporary crash in the Crypto market, lower interest rates typically encourage risk-on investments.
This alone suggests that the cryptocurrency might see much more green in 2025.
As a result, investors have been stacking up on the cryptocurrency in anticipation of the bull market’s full stretch.
Bitcoin’s Scarcity Is A Key Underlying Factor
The cryptocurrency’s scarcity is also a major driver of its value beyond these immediate catalysts.
Its fixed supply of 21 million coins—with only about 1.2 million left to be mined—continues to attract investors.
This built-in scarcity has been a key driver of its appeal as a store of value.
Brian Armour of Morningstar told ABC News, “When new demand is generated, if people aren’t willing to sell, then buyers must pay higher prices.”
While Bitcoin’s trajectory remains promising, it still has its fair share of risks.
The cryptocurrency’s history of volatility serves as a reminder that upward price swings cannot continue forever.
In recent years, the cryptocurrency has experienced massive drawdowns, including a 50% drop in 2021.
At the time of writing, even after surpassing the $100,000 mark, Bitcoin is currently consolidating between $95,000 and $90,000.
In essence, investors must take a measured approach towards investing in risk assets.
The Bitcoin Halvings Have A Part To Play
Another major factor that drives Bitcoin’s surge is the predictable nature of its halving cycles.
Bitcoin halvings occur approximately every four years and reduce the rewards that miners get by 50%.
This means that it slows down the creation of new Bitcoin.
It also means that the lower supply flow directly affects the increasing demand. Therefore, if the relationship between demand and supply holds, prices should inevitably skyrocket.
Halvings have historically come before bull runs. For example, the 2020 halving came right before Bitcoin’s surge above the $60,000 mark in 2021.
Similarly, the 2024 halving in April 2024 came right before Bitcoin’s surge above the $100,000 mark.
Experts generally believe that halvings are influential because the number of coins to be mined continue to shrink.
As miners receive fewer rewards, the scarcity effect carries Bitcoin higher and higher.
If history is any indicator, the next few years will may solidify Bitcoin’s position as both a store of value and an asset, well above the $100,000 mark.
What Lies Ahead?
Ultimately, experts are still optimistic about the future of cryptocurrency.
Some believe that Bitcoin is headed for the $125,000 mark by the end of 2024 or early 2025.
The cryptocurrency is also expected to hit the $200,000 mark in 2025, with Bitwise even suggesting a possible climb to $500,000.
However, the market’s direction ultimately depends on several factors, including institutional and retail adoption.
For now, the cryptocurrency’s journey past the $100,000 mark is a historic milestone, and come 2025, the sky’s the limit.
Disclaimer: This article is aimed at delivering accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
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